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Ch 9: Corporate Fundraising (Can be exempt from disclosure document if: …
Ch 9: Corporate Fundraising
Disclosure documents :check:
Prospectus
Not required if:
s 709
- amount of money to raise is $10m or less
Profile statement
brief summary statement in addition to Prospectus
s 721
- can replace a prospectus with ASIC's consent
Offer information statement
less than $10m
Securities in
Ch 6D
shares
debentures
s 9 -
legal right for a company to repay
Secured
Security interest
non-circulating asset ("fixed")
circulating asset ("floating")
Unsecured
Chapter 2L
and compliance with
Chapter 2D
preparation of a trust deed
appointment of a trustee
maintenance of register
options
Can be exempt from disclosure document if: :green_cross:
Professional investor
controls gross assets of at least $10m
Sophisticated investor
experienced investor (through licensed dealer)
ASIC v Maxwell
- licensee must act with diligence and care
wealth investor: qualified accountant certifies they have net assts of $2.5m or gross income of $250,000 for the last 2 FY's
minimum payment is $500,000
Small scale personal offer
can only be accepted by the person and likely to be interested
company is raising less than $2m in 12 month period
targets less than 20 people and
s 708
- offered to person in the company (snr manager)
Material information
information has an effect on the price of the securities
not mere speculation or opinion (
AAPT v Cable & Wireless Optus Ltd
Supplementary or replacement disclosure documents
s 719
person making the offer is aware that:
DD is misleading or deceptive
DD has omitted key information
new circumstances arise
information is not worded clearly
Defective disclosures :red_cross:
Document is misleading or deceptive and contravenes
s 728
Investors can recover loss/ damage from: (
s 729
)
the company
the directors
proposed directors named with their consent
underwriters named with their consent
a person named in the DD with their consent (for their statement)
Misleading defence
Due Diligence
(s 731)
People from
s 729
can avoid if they prove:
Director made all inquires reasonable that info is correct
After inquires, believe on reasonable grounds that statement is not misleading or deceptive and no omission
ASIC can issue a stop order
(s 739)
Concept Sports case
Prospectus forecasted large profit, shares lost 70% of value in 2 months
Sino Australia Case
misleading information led to civil penalty to Director of $5.5m and banning order for 20 years
Anti avoidance
s 707
ASIC v Axis
tried to avoid DD by issuing to related co's